How Do MSPs Turn Infrastructure Services Into Recurring Revenue?

Managed service providers (MSPs) build profitable infrastructure services by modernizing, protecting, governing, operating, and optimizing customer environments through a single standardized delivery model, rather than responding to problems on a project-by-project basis. Repeatable services across cloud operations, resilience, governance, optimization, and AI readiness let revenue scale faster than headcount.

Key Takeaways

• Standardization drives margin. MSPs that standardize infrastructure services across every tenant scale revenue without increasing headcount at the same rate, since delivery cost per tenant falls as the business grows.
• Integration beats point solutions. 91% of MSPs say integrating backup and disaster recovery with governance and compliance delivers stronger customer value than offering them separately.
• Cybersecurity-core MSPs grow faster. 72% of MSPs treating cybersecurity as a core offering saw revenue jump over two years, compared with 42% of less-strategic sellers and 35% of opportunistic add-on sellers.
• Multicloud is underclaimed territory. Most infrastructure conversations still center on Microsoft 365, but Azure, AWS, and Google Cloud protection remain a real, underdeveloped attach opportunity already showing up in live business development representative (BDR) pitches.
• AI is expanding the baseline MSPs must manage. 93% of enterprises now use AI applications, and governance and compliance is the top barrier customers face in AI adoption, ahead of data security and technical expertise gaps.
• Fragmented tooling caps profitability structurally, not just operationally. As governance becomes continuous and AI readiness demands cross-domain visibility, the average organization already runs about ten cloud security tools, and 47% report that number grew year over year.
• Backup and recovery sales are already rising. 60% of ITSPs saw increased backup-and-recovery sales in the last year, evidence that the market is already paying for exactly this service.

Why Is Infrastructure Profitability a Bigger Deal for MSPs Right Now?

Infrastructure profitability matters because customers are expanding across Microsoft 365, Azure, SaaS applications, and AI workloads faster than they can effectively manage them. As environments become more complex, MSPs have an opportunity to turn cloud operations, resilience, governance, and optimization into recurring services.

The demand side is not the problem: worldwide end-user spending on information security is forecast to grow from $213 billion in 2025 to $240 billion in 2026. According to Omdia, the global managed security market specifically is projected to $106 billion in 2026, growing 14% annually. And MSP compliance services alone are forecast to grow 21% in 2026.

The margin side is the actual problem. Fragmented tooling is becoming a structural constraint on MSP profitability rather than a manageable inconvenience, as governance becomes continuous and AI readiness demands cross-domain visibility. Demand is not the bottleneck — it’s the ability to deliver infrastructure services consistently, at a predictable cost.

What’s Actually Capping MSP Infrastructure Margins?

Tool sprawl, manual onboarding, and undetected configuration drift are what cap MSP infrastructure margins, not a lack of customer demand. The average organization now runs about 10 cloud security tools, and 47% report that number increased year over year.

Two in five MSPs cite customer-environment variability as the single biggest barrier to full automation. Manual onboarding compounds it: checklists, scripts, and tenant-by-tenant decisions require senior engineers, and inconsistent setups create downstream remediation work that delays time-to-value and revenue realization. Configuration drift, meanwhile, tends to surface only during audits, incidents, or escalations, exactly when it is most expensive to discover.

What Happened: Rackspace, December 2022

A ransomware attack forced Rackspace, a company whose entire business is hosting infrastructure, to take down its Hosted Exchange environment on December 2, 2022, disrupting email access for a large share of its customer base. Rackspace ultimately disclosed losses of roughly $11 million, with cyber insurance covering about $5.4 million, as reported by TechCrunch.

The lesson for infrastructure services is not abstract: if an MSP whose entire business model is hosting infrastructure can be taken down by ransomware, the infrastructure protection is not a bespoke add-on that a partner offers to security-conscious customers. It is the baseline every customer now assumes is already handled, and the MSPs that price and deliver it that way are the ones building a profitable practice around it instead of absorbing the risk for free.

How Do You Build a Profitable Infrastructure Services Practice?

MSPs build a profitable infrastructure services practice by separating it into its own priced service line, standardizing delivery on a single platform before the next tenant onboards, attaching it to deals already in motion, automating onboarding and enforcement, and reporting outcomes instead of activity.

What Infrastructure Services Create Recurring Revenue?

MSPs need a multitenant management platform, baseline configuration management, drift detection, and centralized policy enforcement and reporting to deliver infrastructure services at scale, tied into the professional services automation (PSA) and remote monitoring and management (RMM) tools that the practice already runs on.

Multitenant management allows a practice to administer, monitor, and apply policies across all customer tenants from a single place, instead of managing each one individually, thereby reducing delivery costs per tenant as the business grows. Baseline configuration management and drift detection close the gap that native monitoring cannot: most tenant configuration tooling supports only a limited number of monitored objects and a capped daily check-in cycle, which is enough to define a standard but not enough, on its own, to enforce it consistently without a platform built for the job.

What Does This Mean for Microsoft 365 and Multicloud Environments?

For Microsoft 365 and multicloud environments, profitable infrastructure services mean covering Azure, AWS, and Google Cloud alongside Microsoft 365, not just the platform a practice already knows best.

MSPs that standardize protection and governance only around Microsoft 365 are leaving that share unaddressed, even though their customers are already asking about it. AvePoint Confidence Platform - Elements edition gives MSPs, resellers, value-added resellers (VARs), and systems integrators a unified multitenant platform to protect Azure VMs and Kubernetes workloads, back up and recover Microsoft 365, Azure, and SaaS applications, and apply consistent governance and policy automation across every tenant, replacing the point-tool-per-cloud pattern that caps margin as the business grows.

Three Tiers of MSP Infrastructure Service Maturity

How Does AI Change the Infrastructure Services Opportunity for MSPs?

AI is expanding the infrastructure MSPs need to protect and govern, not replacing the need for it. Enterprises (93%) are now using AI applications, and governance and compliance rank as the most-cited barrier customers face in AI adoption, ahead of data security and technical expertise gaps.

As customers adopt AI applications and agents faster than they can govern them, unmanaged data, permissions, and cloud resources accumulate exactly the pattern that has already played out with cloud sprawl generally. Governance and compliance is the top adoption barrier for 51% of MSPs surveyed, ahead of data and security management (14%), value realization (14%), technical expertise gaps (13%), and business integration (8%). The global AI services partner opportunity, including data readiness, governance, integration, and operational oversight, is forecast to reach $267 billion by 2030. That is a direct extension of the infrastructure services opportunity, not a separate product line to build from scratch.

What Best Practices Separate Profitable MSPs From the Rest?

Treating cybersecurity and infrastructure protection as a core offering, not a complementary add-on, is what separates the most profitable MSPs from the rest. 72% of MSPs treating cybersecurity as core saw revenue jump over two years, versus 42% of less-strategic sellers and 35% of opportunistic add-on sellers.

Among firms treating cybersecurity as core, 55% derived at least half their revenue from cybersecurity sales in the last two years, and 87% expect continued revenue growth over the next two years, compared with 78% of ITSPs selling cybersecurity overall. Data protection and privacy solutions already have the highest adoption incidence among ITSPs, at roughly 60%, ahead of identity and access management, security monitoring, and threat prevention. The pattern is consistent: MSPs that commit to infrastructure services as a strategic, standardized practice outperform the ones treating it as an occasional line item.

Build a Scalable Infrastructure Services Practice with AvePoint Elements 

Every constraint – tool sprawl, manual onboarding, configuration drift, and a margin that shrinks instead of grows – comes down to the same root cause: infrastructure services delivered tenant by tenant instead of standardized once and applied everywhere.

AvePoint Elements gives MSPs, resellers, VARs, and systems integrators one multitenant platform to protect Azure VMs and Kubernetes workloads, back up and recover Microsoft 365, Azure, and SaaS applications, and apply consistent governance and policy automation across every customer tenant. It replaces the point-tool-per-cloud pattern that caps margin as the business grows, so infrastructure services become the priced, standardized, recurring service line this article argues it should be.

Explore AvePoint Elements

Frequently Asked Questions

What is a profitable MSP infrastructure services practice?

A profitable MSP infrastructure services practice is one where infrastructure protection and governance are priced, delivered, and reported as their own service line, not folded invisibly into a general managed-services retainer. It has its own margin, its own delivery standard applied across every tenant, and its own growth trajectory independent of headcount. Most MSPs already deliver some version of this work; the profitable ones can see what it costs and what it earns.

What is the difference between managed services and infrastructure services for MSPs?

Managed services is the broad umbrella: day-to-day administration, help desk, device management, and user support delivered under a general retainer. Infrastructure services is the narrower, technical layer underneath it, protecting, backing up, and governing the compute, storage, and cloud environments a customer’s business runs on. Treating infrastructure services as a distinct line, rather than an assumed part of the broader retainer, is what makes its margin visible.

What is a good profit margin for MSP infrastructure services?

A good profit margin for MSP infrastructure services depends on delivery model: standardized, automated delivery supports meaningfully higher margin than ad hoc, tenant-by-tenant configuration, because delivery cost per tenant falls instead of rising as the business grows. MSPs that separate infrastructure services from their general retainer and track it as its own P&L line are best positioned to know their actual number instead of guessing (verify specific benchmark percentages against a current MSP financial benchmarking source, such as the Service Leadership Index, before publishing).

What infrastructure services should MSPs offer?

The highest-growth infrastructure services typically include cloud modernization, backup and recovery, cloud operations, governance, optimization, hybrid infrastructure management, and AI readiness. Successful MSPs package these capabilities into recurring managed services rather than selling them as one-off projects.

What is baseline management and how does it relate to infrastructure profitability?

Baseline management is the automated standardization of configurations across multiple customer tenants, enforcing consistent security, compliance, and governance policy at scale. It relates directly to infrastructure profitability because Microsoft 365 and cloud complexity is outpacing manual management: continuous product updates and admin changes create configuration drift faster than manual processes can track, especially across dozens or hundreds of tenants. Baseline management is what makes a standardized delivery model enforceable, not just defined on paper.

How often should MSPs review their infrastructure service pricing?

MSPs should review infrastructure service pricing at least annually, and immediately after any change to delivery model. Moving from ad hoc to standardized delivery changes the actual cost to serve, which should be reflected in price. Reviewing pricing without first separating infrastructure services from the general retainer only re-prices a bucket, not the actual service.

What is multitenant management and how does it relate to profitability?

Multitenant management is the ability to administer, monitor, and apply policy across every customer tenant from a single platform, instead of managing each one individually. It relates directly to profitability because it is the mechanism that lets delivery cost per tenant fall as the customer base grows, rather than requiring proportional headcount growth. The core constraint capping MSP infrastructure margins today.

How do MSPs price infrastructure protection as a separate service line?

MSPs price infrastructure protection as a separate service line by first identifying what it actually costs to deliver, licensing, platform, and labor, apart from the general managed-services retainer, then pricing it with its own margin target rather than absorbing it into a flat fee. This is the same principle behind separating any bundled service into its own P&L: visibility has to come before optimization.